HALF YEARLY REPORT 2019 · National Bank of Pakistan Al-Baraka Bank (Pakistan) Ltd. JS Bank Ltd. Faysal Bank Ltd. The Bank of Punjab MCB Islamic Bank Al Falah Ltd. Meezan Bank Ltd

H A L F Y E A R LY R E P O R T 2 0 1 9

Company InformationDirectors’ ReviewAuditor’s Report

Condensed Interim Statement of Financial PositionCondensed Interim Statement of Profit or Loss and Other Comprehensive IncomeCondensed Interim Statement of Changes in EquityCondensed Interim Statement of Cash FlowsNotes to the Condensed Interim Financial information (Unaudited)

Consolidated Condensed Interim Statement of Financial PositionConsolidated Condensed Interim Statement of Profit or Loss and Other Comprehensive IncomeConsolidated Condensed Interim Statement of Changes in EquityConsolidated Condensed Interim Statement of Cash FlowsNotes to the Consolidated Condensed Interim Financial information (Unaudited)

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0608091011

2022232425

Contents

Company InformationLegal AdvisorsS. Abid Sherazi & Co.Ahmed and QaziHassan & Hassan (Advocates)

BankersNational Bank of PakistanAl-Baraka Bank (Pakistan) Ltd.JS Bank Ltd.Faysal Bank Ltd.The Bank of PunjabMCB IslamicBank Al Falah Ltd.Meezan Bank Ltd.Bank Al Habib Ltd.Samba Bank LimitedHabib Metropolitan Bank Limited

Share RegistrarHameed Majeed Associates (Pvt.) Ltd.4th Floor, Karachi Chamber,Hasrat Mohani Road, Karachi.

Registered OfficeF-3, Hub Chawki Road, S.I.T.E.Post Box No. 2706, Karachi - 75730

Website: www.gil.com.pkEmail: [email protected]

Board of DirectorsLt. Gen. (R) Ali Kuli Khan Khattak ChairmanMr. Ahmad Kuli Khan Khattak Chief ExecutiveMrs. Shahnaz Sajjad Ahmad DirectorMaj. (R) Muhammad Zia DirectorMr. Muhammad Kuli Khan Khattak DirectorMr. Shahid Kamal Khan Ind. DirectorMr. Sohail Hameed Khan Ind. Director

Audit CommitteeMr. Sohail Hameed Khan ChairmanMaj. (R) Muhammad Zia MemberMr. Shahid Kamal Khan MemberMr. Shahnawaz Damji Secretary

Human Resource & RemunerationCommitteeMr. Shahid Kamal Khan ChairmanMr. Ahmad Kuli Khan Khattak MemberMaj. (R) Muhammad Zia MemberMr. Sohail Hameed Khan MemberMr. Hassan Mahmood Secretary

Chief Financial OfficerMr. Iftikhar Ahmed Khan

Company SecretaryMr. Talha Ahmed Zaidi

AuditorsM/s. ShineWing Hameed Chaudhri & Co.Chartered Accountants5th Floor, Karachi ChambersHasrat Mohani Road, Karachi.

GHANDHARA INDUSTRIES LIMITED02

Directors’ ReviewThe directors of your company hereby present the unaudited financial statements both standalone and consolidated for the half year ended December 31, 2019.

Financial results

The overall truck and bus market has decreased by 45% as compared with same period of last year, however overall market share of the company stood at approximately 42% for the half year ended December 31, 2019. The company is aware of the challenges being faced by the economy and is accordingly adapting measures to phase out negative impacts from the bottom line figures of the Company.

The results for the half year ended are as follows:

Operating results

The Company’s gross profit observed a decline by 29% as compared with same period last year whereas the Company posted loss after tax of Rs. 105 million as compared with profit of Rs. 383.1 Million during same period last year due to increasing costs on account of currency devaluation, inflationary pressures along with surge in finance cost which alone rose by 91% as compared with corresponding period of last year on account of increased policy rates, these all factors ultimately translated into Loss per share (LPS) of Rs. 2.47 as against EPS of Rs. 8.99 for the corresponding period of last year.

Future outlook

The overall economic indicators of Pakistan still show a challenging outlook, interest rates and increasing inflation have adversely affected overall industry’s progress. In order to revamp sustained growth and boost customer confidence government need to introduce policies that will restore market confidence and accelerate economic activities across the board especially focusing on decreasing policy rates and controlling the inflation keeping in view other fiscal and monetary measures . This could further be confirmed by the fact that had the KIBOR rate fixed at that of the June 2018 the company would still have posted profit during these six months ended December 31, 2019.

However, keeping in view the economic trends, the Company is making all necessary efforts to improve its position on the back of enhanced product line and improved competitiveness which will create sufficient potential demand in local market which will ultimately benefit the stakeholders of the Company and Economy as a whole.

By order of the Board

Ali Kuli Khan Khattak Ahmad Kuli Khan KhattakChairman Chief Executive Officer

KarachiFebruary 19, 2020

For the Half Year ended December 31, 2019 03

SalesGross profitProfit from operations(Loss) / Profit before taxation(Loss) / Profit after taxation(Loss) / Earnings per share - basic and diluted (Rupees)

5,880,616752,755343,909

(144,323)(105,075)

(2.47)

Half Year ended 31 DecemberSTANDALONE

Half Year ended 31 DecemberCONSOLIDATED

7,567,5411,054,332

639,210384,117383,116

8.99

5,880,616752,755343,758

(144,290)(105,052)

(2.47)

7,567,5411,054,332

639,065384,149383,139

8.99

2019 2018 2019 2018---------------------- Rupees in 000 ----------------------

04

SalesGross profitProfit from operations(Loss) / Profit before taxation(Loss) / Profit after taxation(Loss) / Earnings per share - basic and diluted (Rupees)

5,880,616752,755343,909

(144,323)(105,075)

(2.47)

Half Year ended 31 DecemberSTANDALONE

Half Year ended 31 DecemberCONSOLIDATED

7,567,5411,054,332

639,210384,117383,116

8.99

5,880,616752,755343,758

(144,290)(105,052)

(2.47)

7,567,5411,054,332

639,065384,149383,139

8.99

2019 2018 2019 2018---------------------- Rupees in 000 ----------------------

GHANDHARA INDUSTRIES LIMITED

Report on review of Interim Financial StatementsIntroduction We have reviewed the accompanying condensed interim statements of financial position of Ghandhara Industries Limited as at December 31, 2019 and the related condensed interim statement of profit or loss and other comprehensive income, condensed interim statement of changes in equity, and condensed interim statement of cashflows, and notes to the financial statements for the half year then ended (here-in-after referred to as the "interim financial statements"). Management is responsible for the preparation and presentation of these interim financial statements in accordance with accounting and reporting standards as applicable in Pakistan for interim financial reporting. Our responsibility is to express a conclusion on these financial statements based on our review.

The figures of the condensed interim statement of profit or loss and other comprehensive income for the quarters ended December 31, 2019 and 2018 have not been reviewed, as we are required to review only the cumulative figures for the half year ended December 31, 2019. Scope of Review We conducted our review in accordance with International Standard on Review Engagements 2410, “Review of Interim Financial Information Performed by the Independent Auditor of the Entity”. A review of interim financial statements consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements is not prepared, in all material respects, in accordance with accounting and reporting standards as applica-ble in Pakistan for interim financial reporting. The engagement partner on the review resulting in this independent auditors' review report is Osman Hameed Chaudhri. SHINEWING HAMEED CHAUDHRI & CO.

CHARTERED ACCOUNTANTS KARACHI;

Date: February 19, 2020

05For the Half Year ended December 31, 2019

GHANDHARA INDUSTRIES LIMITED For the Half Year ended December 31, 201906

(Un-audited) (Audited)Note December 31, June 30,

2019 2019---------(Rupees in ‘000)---------

ASSETS

Non current assetsProperty, plant and equipment 5 2,755,561 2,770,727 Intangible assets 197 260 Investment property 88,292 88,413 Long term investment 1,400 1,400 Long term loans 2,260 3,639 Long term deposits 23,738 21,948 Deferred taxation 229,317 87,158

3,100,765 2,973,545

Current assets

Stores 4,068 8,328 Stock-in-trade 6 8,826,142 10,359,425 Trade debts 7 507,273 88,406 Loans and advances 165,635 133,759 Trade deposits and prepayments 468,852 542,834 Other receivables 10,840 6,981 Sales tax refundable / adjustable 777,631 390,789 Taxation - payments less provision 1,052,865 918,194 Cash and bank balances 65,057 500,441

11,878,363 12,949,157 Total assets 14,979,128 15,922,702

The annexed notes 1 to 16 form an integral part of the condensed interim financial statements.

Condensed Interim Statement Of Financial PositionAS AT DECEMBER 31, 2019

Ahmad Kuli Khan Khattak Maj. (R) Muhammad Zia Iftikhar Ahmed Khan

Chief Executive Director Chief Financial Officer

GHANDHARA INDUSTRIES LIMITED For the Half Year ended December 31, 2019 07


2019 2019---------(Rupees in ‘000)---------

EQUITY AND LIABILITIES

Share capital and reservesAuthorised capital100,000,000 (June 30, 2019: 50,000,000) ordinary shares

of Rs.10 each 1,000,000 500,000 Issued, subscribed and paid up capital

42,608,844 (June 30, 2019: 42,608,844) ordinary shares of Rs.10 each 426,088 426,088

Revenue reserveUnappropriated profit 2,071,656 2,172,735

Capital reserveSurplus on revaluation of fixed assets 2,045,565 2,049,561

4,543,309 4,648,384 Liabilities

Non current liabilitiesLease liabilities 78,182 51,745 Compensated absences 14,623 13,045 Deferred liabilities 26,071 19,759

118,876 84,549

Current liabilitiesTrade and other payables 3,343,731 4,582,157 Unpaid dividends 78,959 78,959 Unclaimed dividends 22,068 22,151 Accrued mark-up / interest 279,503 196,453 Short term borrowings 8 6,564,399 6,296,614 Current maturity of lease liabilities 28,283 13,435

10,316,943 11,189,769

Total liabilities 10,435,819 11,274,318 Contingencies and commitments 9Total equity and liabilities 14,979,128 15,922,702


Condensed Interim Statement Of Financial PositionAS AT DECEMBER 31, 2019




Condensed Interim Statement Of Profit Or Loss And Other Comprehensive Income (Un-Audited)FOR THE HALF YEAR ENDED DECEMBER 31, 2019



Quarter ended Half year ended

Note December 31, December 31, December 31, December 31,

2019 2018 2019 2018

-----------------------(Rupees in '000)-----------------------

Sales - net 2,852,104 3,183,699 5,880,616 7,567,541 Cost of sales 10 (2,506,327) (2,752,169) (5,127,861) (6,513,209)Gross profit 345,777 431,530 752,755 1,054,332 Distribution cost (130,880) (139,259) (279,010) (275,689)Administrative expenses (81,885) (78,945) (146,342) (142,156)Other expenses (3,898) (2,756) (4,371) (22,265)Other income 12,494 21,856 20,878 24,988 Profit from operations 141,607 232,426 343,909 639,210 Finance cost (266,641) (162,122) (488,233) (255,093)(Loss) / profit before taxation (125,033) 70,304 (144,323) 384,117 Taxation 6,251 9,109 39,248 (1,001)(Loss) / profit after taxation (118,782) 79,413 (105,075) 383,116 Other comprehensive income - - - - Total comprehensive (loss) / income (118,782) 79,413 (105,075) 383,116

----------------------------- (Rupees) ----------------------------

Basic and diluted (loss) / earnings per share (2.79) 1.86 (2.47) 8.99



Condensed Interim Statement Of Changes In Equity (Un-Audited)FOR THE HALF YEAR ENDED DECEMBER 31, 2019



Revenue CapitalReserve Reserve

Share Unappro- Surplus on Totalcapital priated profit revaluation

of fixedassets

----------------- (Rupees in '000) -----------------

Balance as at July 1, 2018 (Audited) 213,044 2,651,071 1,860,014 4,724,129

Transaction with owners recognised directly in equity

Final dividend for the year ended June 30, 2018at the rate of Rs.15.6 per share - (332,349) - (332,349)

Bonus shares issued 213,044 (213,044) - -

Total comprehensive income for the half year ended December 31, 2018

Profit for the period - 383,116 - 383,116 Other comprehensive income - - - -

- 383,116 - 383,116 Transfer from surplus on revaluation of

fixed assets on account of increm entaldepreciation - net of deferred taxation - 2,229 (2,229) -

Balance as at December 31, 2018 (Un-audited) 426,088 2,491,023 1,857,785 4,774,896

Balance as at July 1, 2019 (Audited) 426,088 2,172,735 2,049,561 4,648,384

Total comprehensive income for the halfyear ended December 31, 2019

Loss for the period - (105,075) - (105,075)Other comprehensive income - - - -

- (105,075) - (105,075)Transfer from surplus on revaluation of

fixed assets on account of incrementaldepreciation - net of deferred taxation - 3,996 (3,996) -

Balance as at December 31, 2019 (Un-audited) 426,088 2,071,656 2,045,565 4,543,309



Condensed Interim Statement of Cash FlowsFOR THE HALF YEAR ENDED DECEMBER 31, 2019



Half year ended Note December 31, December 31,

2019 2018---------(Rupees in ‘000)---------

CASH FLOWS FROM OPERATING ACTIVITIES

Cash used in operations 11 (20,154) (4,165,125)Gratuity paid (4,732) (338)Compensated absences paid (53) - Finance cost paid (405,183) (193,005)Income tax paid (237,582) (388,889)Long term loans - net 1,379 532 Long term deposits - net (1,790) (7,615)Net cash used in operating activities (668,115) (4,754,440)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (46,617) (124,886)Proceeds from sale of operating fixed assets 3,824 2,717 Interest received 2,210 1,291 Net cash used in investing activities (40,583) (120,878)

CASH FLOWS FROM FINANCING ACTIVITIES

Lease liabilities - net 5,612 (5,023)Dividend paid (83) (298,648)

Net cash geneared from / (used in) financing activities 5,529 (303,671)Net decrease in cash and cash equivalents (703,169) (5,178,989)Cash and cash equivalents - at beginning of the period (5,796,173) (3,134,590)Cash and cash equivalents - at end of the period 12 (6,499,342) (8,313,579)



1. LEGAL STATUS AND NATURE OF BUSINESS

Ghandhara Industries Limited (the Company) was incorporated on February 23, 1963. The Company’s shares are quoted on Pakistan Stock Exchange Limited. The principal activity is the assembly, progressive manufacturing and sale of Isuzu trucks, buses and pick ups. The registered office of the Company is at F-3, Hub Chowki Road, S.I.T.E, Karachi.

Bibojee Services (Private) Limited, the ultimate Holding Company, held 16,686,794 (June 30, 2019:

16,686,794) ordinary shares of Rs.10 each of the Company. 2. BASIS OF PREPARATION

These condensed interim financial statements have been prepared in accordance with the accounting

and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards applicable in Pakistan for interim financial reporting comprise of: - International Accounting Standard (IAS) 34, issued by the International Accounting Standards Board

(IASB) as notified under the Companies Act, 2017; and

- Provision of and directives issued under the Companies Act, 2017.

Where the provision of and directives issues under the Companies Act, 2017 differ with the requirements of IAS 34, the provisions of and directives issued under the Companies Act, 2017 have been followed.

These condensed interim financial statements have been subjected to limited scope review by the auditors, as required under section 237 of Companies Act, 2017 and should be read in conjunction with audited annual financial statements of the Company for the year ended June 30, 2019.

3. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the preparation of audited annual financial statements of the Company for the year ended June 30, 2019.

The changes in accounting policies are also expected to be reflected in the Company’s financial

statements as at and for the year ending June 30, 2020. The Company has initially adopted IFRS 16 ‘Leases’ from July 1, 2019. A number of other new standards

are effective form July 1, 2019 but they do not have a material effect on these condensed interim financial statements.

IFRS 16 ‘Leases’ affects primarily the accounting by lessees and results in the recognition of almost

all leases on statement of financial position. The standard removes distinction between operating and financing leases and requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals for virtually all lease contracts. An optional exemption exists for short-term and low-value leases. The accounting by lessors does not significantly changed. Some differences may arise as a result of the new guidance on the definition of a lease. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Under IFRS 16, for sale and lease back transactions a transfer of asset is accounted for as a sale when a performance obligation is satisfied as required by IFRS 15.

The Company has applied IFRS 16 using the modified retrospective approach. Under this approach, the cumulative effect of initial application to be recognized in retained earnings at July 1, 2019. Accordingly, the comparative information presented for 2019 has not been restated - i.e. it is presented as previously reported under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below:

Notes To The Condensed Interim Financial Statements (Un-Audited)FOR THE HALF YEAR ENDED DECEMBER 31, 2019


As a lessee, the Company previously classified leases as operating or finance leases based on its assessment of whether the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16 the Company recognizes right to use assets and lease liabilities for leases - i.e. these leases are on the statement of financial position. On initial application, the Company has also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (‘short-term leases’), and lease contracts for which the underlying asset is of low value (‘low-value assets’). Some lease contracts of the Company are extendable through mutual agreement between the Company and the lessor or cancellable by both parties immediately or on short notice. In assessing the lease term for the adoption of IFRS 16, the Company concluded that such contracts are short-term in nature. The Company recognizes the lease payments associated with these leases as an expense in statement of profit or loss.

The Company presents right to use assets in ‘property, plant and equipment’, the same line item as it presents underlying assets of the same nature that it owns. The Company present its lease liabilities as a separate line item in the statement of financial position.

The Company recognizes a right to use asset and a lease liability at the lease commencement date.

The right to use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for certain re-measurement of the lease liability. At transition, the Company recognised right to use assets equal to the present value of lease payments.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the interest rate implicit in the lease or if that rate cannot be readily determined, the Company’s incremental borrowing rate is used.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by

lease payment made 4. ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of condensed interim financial statements requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing this condensed interim financial statements, the significant judgements made by management in applying the Company’s accounting policies and the key sources of estimation and uncertainty were the same as those that applied to the audited annual financial statements for the year ended June 30, 2019.


2019 2019-----(Rupees in '000)-----

Operating fixed assets 5.1 2,604,632 2,681,578 Right to use assets 5.3 76,928 - Capital work-in-progress 74,001 89,149

2,755,561 2,770,727




2019 20195.1 Operating fixed assets -----(Rupees in '000)-----

Net book value at beginning of the period / year 2,681,578 2,045,429 Transfer to right to use assets costing

Rs.82,758 thousand (53,884)Additions during the period / year 5.2 61,765 792,239 Disposals and written off, costing Rs.3,695

thousand (June 30, 2019: Rs.76,810 thousand) - at net book value (1,616) (14,434)

Depreciation charge for the period / year (83,211) (141,656)Net book value at end of the period / year 2,604,632 2,681,578

5.2 Revaluation / additions to operating fixed assets, including transfer from capital work-in-progress,during the period / year

Owned

- Leasehold land - 189,300 - Building on leasehold land 44,375 143,039 - Plant and machinery 297 71,094 - Permanent tools 115 16,262 - Furniture and fixture 734 1,388 - Motor vehicles 11,598 32,133 - Trucks / lift trucks - 20,923 - Office machines & equipment 2,187 10,400 - Computers 542 2,769 - Jigs and special tools 1,917 274,633

Leased - Cars - 30,298 61,765 792,239

5.3 Right to use assets

Transfer from operating fixed assets costing Rs.82,758 thousand 53,884 -

Amount recognised on initial application 32,380 Additions during the period 3,293 - Depreciation charge for the period (12,629) - Net book value at end of the period 76,928 -

6. STOCK-IN-TRADE

Raw materials and components 4,901,543 7,300,167 Work-in-process 87,176 153,698 Finished goods including components 3,087,181 2,295,343 Trading stocks 750,242 610,217

8,826,142 10,359,425



(Un-audited) (Audited)December 31, June 30,

2019 20197. TRADE DEBTS - Unsecured -----(Rupees in '000)-----

Government and semi-government agencies 10,468 2,072 Others including dealers - net 496,805 86,334

507,273 88,406

8. SHORT TERM BORROWINGS - Secured

Running finances 1,832,311 1,753,234 Finance against imported merchandise 2,280,235 2,941,765 Istisna 2,241,949 1,440,727 Murabaha 209,904 160,888

6,564,399 6,296,614

9. CONTINGENCIES AND COMMITMENTS

9.1 Contingencies There has been no significant change in status of contingencies other than describe below and as

disclosed in note 27.1 of the audited annual financial statements of the Company for the year ended June 30, 2019.


2019 20199.2 Commitments -----(Rupees in '000)-----

Bank guarantees 3,649,783 3,943,290 Letters of credit 1,279,071 1,453,626

(Un-audited) Quarter ended Half year ended


2019 2018 2019 2018

10. COST OF SALES -----------------------(Rupees in '000)-----------------------

Stocks at beginning of the period 2,963,558 2,233,730 2,905,560 1,963,261

Cost of goods manufactured 3,389,802 4,462,159 5,647,288 8,349,429

Trading goods - purchases (9,610) 182,179 412,436 326,418

3,380,192 4,644,338 6,059,724 8,675,847

6,343,750 6,878,068 8,965,284 10,639,108

Stocks at end of the period (3,837,423) (4,125,899) (3,837,423) (4,125,899)

2,506,327 2,752,169 5,127,861 6,513,209



(Un-audited) Quarter ended Half year ended


2019 2018 2019 2018

-----------------------(Rupees in '000)-----------------------

10.1 Cost of goods manufactured

Work in process at beginning of the period 102,579 154,803 153,698 109,209

Raw materials and components consumed 3,116,130 4,233,709 5,118,237 7,842,122

Direct labour and factory overheads 258,269 310,322 462,529 634,773

3,374,399 4,544,031 5,580,766 8,476,895

3,476,978 4,698,834 5,734,464 8,586,104

Work in process at end of the period (87,176) (236,675) (87,176) (236,675)

3,389,802 4,462,159 5,647,288 8,349,429

(Un-audited) Half year ended

Note December 31, December 31,2019 2018

11. CASH USED IN OPERATIONS -----(Rupees in '000)-----

(Loss) / profit before taxation (144,323) 384,117Adjustment for non cash charges and other itemsDepreciation / amortization on:

- property, plant and equipment 83,211 55,322 - right to use asset 12,629 - - intangible assets 63 63 - investment property 121 123

Gain on disposal of operating fixed assets (2,208) (2,714)Provision for compensated absences 1,631 - Provision for doubtful advances 3,730 - Amortization of gain on sale and lease back

of fixed asset (179) (181)Exchange loss 23 119 Provision for gratuity 11,223 12,431 Interest income (2,210) (1,291)Finance cost 488,233 255,093

451,944 703,082 Working capital changes - net 11.1 (472,098) (4,868,207)

(20,154) (4,165,125)




Note December 31, December 31,2019 2018

-----(Rupees in '000)-----11.1 Working capital changes

Decrease / (increase) in current assets:Stores 4,260 (4,278)Stock-in-trade 1,533,283 (4,713,504)Trade debts (422,597) (28,340)Loans and advances (31,876) 32,114 Trade deposits and prepayments 73,982 194,157 Other receivables (3,882) (16,310)Sales tax refundable / adjustable (386,842) (297,524)

766,328 (4,833,685)Decrease in trade and other payables (1,238,426) (34,522)

(472,098) (4,868,207)

12. CASH AND CASH EQUIVALENTS

Cash and bank balances 65,057 243,936 Short term borrowings (6,564,399) (8,557,515)

(6,499,342) (8,313,579)

13. FINANCIAL RISK MANAGEMENT

The Company’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including currency risk, interest rate risk and price risk).

The condensed interim financial statements does not include all financial risk management information

and disclosures required in the audited annual financial statements and should be read in conjunction with the audited annual financial statement of the Company as at June 30, 2019.

There have been no changes in the risk management policies since the year end.



14. TRANSACTIONS WITH RELATED PARTIES 14.1 Significant transactions with related parties are as follows:

Name of related party Nature of (Un-audited)

and nature of transactions Half year endedrelationship December 31, December 31,

2019 2018---- (Rupees in '000) ----

(a) Holding CompanyBibojee Services (Pvt.) Dividend paid - 130,157

Ltd. Bonus shares issued - 83,434

(b) Subsidiary CompanyMarghzar Industries (Pvt.) Financial charges 185 177

Ltd. Reimbursement of expenses 152 145

(c) Associated CompaniesThe General Tyre and Rubber Purchase of tyres 73,918 117,957

Co. of Pakistan Ltd. Dividend paid - 1,571 (Common Directorship) Bonus shares issued - 1,007

Services rendered - 70 Sale of truck and parts - -

Ghandhara Nissan Ltd. Assembly charges 255,949 396,659 (Common Directorship) Purchase of parts - -

Sale of parts 50 32 Dividend paid - 63,432 Rental income 1,597 1,430 Reimbursement of expenses 444 24 Bonus shares issued - 40,662

The Universal InsuranceCompany Limited Dividend paid - 18,473 (Common Directorship) Bonus shares issued - 11,841

Bibojee Investments (Pvt.)Ltd. Dividend paid - 334 (Common Directorship) Bonus shares issued - 214

Rehman Cotton Mills Ltd. Rent expense 900 900 (Common Directorship)

Gammon Pakistan Ltd. Rent expense 1,500 1,500 (Common Directorship) Reimbursement of expenses 63 1,533

Janana De Maluchho TextileMills Limited Reimbursement of expenses 1,077 834

(Common Directorship)Ghandhara DF (Pvt.) Ltd. Rental income 1,597 -

(Common Directorship) Sales - 8 Purchase of parts 2 22

(d) OtherProvident fund Contribution paid 4,732 - Key management Remuneration and

personnel other benefits 64,810 64,566




2019 201914.2 Period / year end balances are as follows: -----(Rupees in '000)-----

Receivables from related parties

Long term investment 1,400 1,400 Loans and advances 290 340 Other receivables 10,840 6,981 Payable to related partiesCompensated absences 4,640 3,598 Trade and other payables 114,370 120,205

15. CORRESPONDING FIGURES

In order to comply with the requirements of International Accounting Standard 34 - ‘Interim Financial Reporting’, the condensed interim statement of financial position has been compared with the balances of audited annual financial statements of the Company for the year ended June 30, 2019, whereas, the condensed interim statement of profit or loss account and other comprehensive income, condensed interim statement of changes in equity and condensed interim statement of cash flows have been compared with the balances of comparable period of condensed interim financial statements of the Company for the period ended December 31, 2018. Corresponding figures have been rearranged and reclassified for better presentation wherever considered necessary, the effect of which is not material.

16. DATE OF AUTHORIZATION

This condensed interim financial statement was authorized for issue on February 19, 2020 by the Board of Directors of the Company.




19

Consolidated Condensed Interim Financial InformationFor the Half Year ended December 31, 2019

For the Half Year ended December 31, 2019



2019 2019-----(Rupees in ‘000)-----

ASSETS

Non current assets

Property, plant and equipment 5 2,755,561 2,770,727 Intangible assets 197 260 Investment property 88,292 88,413 Long term loans 2,260 3,639 Long term deposits 23,738 21,948 Deferred taxation 229,317 87,158

3,099,365 2,972,145

Current assets

Stores 4,068 8,328 Stock-in-trade 6 8,826,142 10,359,425 Trade debts 7 507,273 88,406 Loans and advances 165,635 133,759 Trade deposits and prepayments 468,852 542,834 Other receivables 10,840 6,981 Sales tax refundable / adjustable 777,631 390,789 Taxation - payments less provision 1,052,832 918,170 Cash and bank balances 65,057 500,441

11,878,330 12,949,133 Total assets 14,977,695 15,921,278

The annexed notes 1 to 16 form an integral part of the consolidated condensed interim financial statements.

Consolidated Condensed Interim Statement Of Financial PositionAS AT DECEMBER 31, 2019





2019 2019-----(Rupees in ‘000)-----

EQUITY AND LIABILITIES

Share capital and reserves

Authorised capital100,000,000 (June 30, 2019: 50,000,000) ordinary shares

of Rs.10 each 1,000,000 500,000 Issued, subscribed and paid up capital

42,608,844 (June 30, 2019: 42,608,844) ordinary shares of Rs.10 each 426,088 426,088

Revenue reserve Unappropriated profit 2,072,635 2,173,691 Capital reserve Surplus on revaluation of fixed assets 2,045,565 2,049,561

4,544,288 4,649,340 Non - controlling interest 5 5

4,544,293 4,649,345

Liabilities

Non current liabilities

Lease liabilities 78,182 51,745 Compensated absences 14,623 13,045 Deferred liabilities 26,071 19,759

118,876 84,549

Current liabilities

Trade and other payables 3,341,314 4,579,772 Unpaid dividends 78,959 78,959 Unclaimed dividends 22,068 22,151 Accrued mark-up / interest 279,503 196,453 Short term borrowings 8 6,564,399 6,296,614 Current maturity of lease liabilities 28,283 13,435

10,314,526 11,187,384 Total liabilities 10,433,402 11,271,933 Contingencies and commitments 9Total equity and liabilities 14,977,695 15,921,278




Consolidated Condensed Interim Statement Of Financial PositionAS AT DECEMBER 31, 2019


Consolidated Condensed Interim Statement Of Profit Or Loss And Other Comprehensive Income (Un-Audited)FOR THE HALF YEAR ENDED DECEMBER 31, 2019



Quarter ended Half year ended


2019 2018 2019 2018

-----------------------(Rupees in '000)-----------------------

Sales - net 2,852,104 3,183,699 5,880,616 7,567,541

Cost of sales 10 (2,506,327) (2,752,169) (5,127,861) (6,513,209)

Gross profit 345,777 431,530 752,755 1,054,332

Distribution cost (130,880) (139,259) (279,010) (275,689)

Administrative expenses (81,977) (79,030) (146,494) (142,301)

Other expenses (3,898) (2,756) (4,371) (22,265)

Other income 12,494 21,856 20,878 24,988

Profit from operations 141,515 232,341 343,758 639,065

Finance cost (266,548) (162,033) (488,048) (254,916)

(Loss) / profit before taxation (125,032) 70,308 (144,290) 384,149

Taxation 6,250 9,108 39,238 (1,010)

(Loss) / profit after taxation (118,782) 79,416 (105,052) 383,139

Other comprehensive income - - - -

Total comprehensive (loss) / income (118,782) 79,416 (105,052) 383,139

----------------------------- (Rupees) ----------------------------

Basic and diluted (loss) / earnings per share (2.79) 1.86 (2.47) 8.99



Consolidated Condensed Interim Statement Of Changes In Equity (Un-Audited)FOR THE HALF YEAR ENDED DECEMBER 31, 2019

Revenue CapitalReserve Reserve Non -

Share Unappro- Surplus on Total controllingcapital priated profit revaluation interest

of fixedassets

----------------- (Rupees in '000) -----------------

Balance as at July 1, 2018 (Audited) 213,044 2,651,071 1,860,014 4,724,129 5

Transaction with owners recogniseddirectly in equity

Final dividend for the year ended June 30, 2018at the rate of Rs.15.6 per share - (332,349) - (332,349) -

Bonus shares issued 213,044 (213,044) - - - Total comprehensive income for the half

year ended December 31, 2018Profit for the period - 383,139 - 383,139 - Other comprehensive income - - - - -

- 383,139 - 383,139 - Transfer from surplus on revaluation of

fixed assets on account of incrementaldepreciation - net of deferred taxation - 2,229 (2,229) - -

Balance as at December 31, 2018 (Un-audited) 426,088 2,491,046 1,857,785 4,774,919 5 Balance as at July 1, 2019 (Audited) 426,088 2,173,691 2,049,561 4,649,340 5 Total comprehensive income for the half

year ended December 31, 2019Loss for the period - (105,052) - (105,052) - Other comprehensive income - - - - -

- (105,052) - (105,052) - Transfer from surplus on revaluation of

fixed assets on account of incrementaldepreciation - net of deferred taxation - 3,996 (3,996) -

Balance as at December 31, 2019 (Un-audited) 426,088 2,072,635 2,045,565 4,544,288 5





Consolidated Condensed Interim Statement Of Cash Flows (Un-Audited)FOR THE HALF YEAR ENDED DECEMBER 31, 2019

Half year ended Note December 31, December 31,

2019 2018-----(Rupees in ‘000)-----

CASH FLOWS FROM OPERATING ACTIVITIES

Cash used in operations 11 (20,338) (4,165,125)Gratuity paid (4,732) (338)Compensated absences paid (53) - Finance cost paid (404,998) (193,005)Income tax paid (237,583) (388,889)Long term loans - net 1,379 532 Long term deposits - net (1,790) (7,615)Net cash used in operating activities (668,115) (4,754,440)

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property, plant and equipment (46,617) (124,886)Proceeds from sale of operating fixed assets 3,824 2,717 Interest received 2,210 1,291 Net cash used in investing activities (40,583) (120,878)

CASH FLOWS FROM FINANCING ACTIVITIES

Lease liabilities - net 5,612 (5,023)Dividend paid (83) (298,648)Net cash geneared from / (used in) financing activities 5,529 (303,671)

Net decrease in cash and cash equivalents (703,169) (5,178,989)

Cash and cash equivalents - at beginning of the period (5,796,173) (3,134,590)

Cash and cash equivalents - at end of the period 12 (6,499,342) (8,313,579)





1. THE GROUP AND ITS OPERATIONS

The Group consists of Ghandhara Industries Limited (the Holding Company) Marghazar Industries (Private) Limited (the Subsidiary Company).

1.1 Ghandhara Industries Limited

Ghandhara Industries Limited (the Holding Company) was incorporated on February 23, 1963. The

Company’s shares are quoted on Pakistan Stock Exchange Limited. The principal activity is the assembly, progressive manufacturing and sale of Isuzu trucks, buses and pick ups. The registered office of the Company is at F-3, Hub Chowki Road, S.I.T.E, Karachi. The manufacturing facilities of the Company are located at S.I.T.E., Karachi with branches at Lahore, Multan, Rawalpindi and Peshawar.

1.2 Marghazar Industries (Private) Limited

Marghazar Industries (Private) Limited (the Subsidiary Company) was incorporated as a private limited company on March 7, 1969. The registered office of the Company is located at Gardee Trust Building, Napier Road, Lahore. The Company is subsidiary of Ghandhara Industries Limited; which holds 140,000 ordinary shares representing 99.79% of the total capital of the Company.

2. BASIS OF PREPARATION

These condensed interim financial statements have been prepared in accordance with the accounting

and reporting standards as applicable in Pakistan for interim financial reporting. The accounting and reporting standards applicable in Pakistan for interim financial reporting comprise of:

- International Accounting Standard (IAS) 34, issued by the International Accounting Standards Board (IASB) as notified under the Companies Act, 2017; and

- Provision of and directives issued under the Companies Act, 2017.

Where the provision of and directives issues under the Companies Act, 2017 differ with the requirements

of IAS 34, the provisions of and directives issued under the Companies Act, 2017 have been followed.

3. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES

Except as described below, the accounting policies applied in these interim financial statements are the same as those applied in the preparation of audited annual financial statements of the Group for the year ended June 30, 2019.

The changes in accounting policies are also expected to be reflected in the Group’s financial statements

as at and for the year ending June 30, 2020. The Group has initially adopted IFRS 16 ‘Leases’ from July 1, 2019. A number of other new standards

are effective form July 1, 2019 but they do not have a material effect on these condensed interim financial statements.

IFRS 16 ‘Leases’ affects primarily the accounting by lessees and results in the recognition of almost

all leases on statement of financial position. The standard removes distinction between operating and financing leases and requires recognition of an asset (the right to use the leased item) and a financial liability to pay rentals for virtually all lease contracts. An optional exemption exists for short-term and low-value leases. The accounting by lessors does not significantly changed. Some differences may arise as a result of the new guidance on the definition of a lease. Under IFRS 16, a contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Under IFRS 16, for sale and lease back transactions a transfer of asset is accounted for as a sale when a performance obligation is satisfied as required by IFRS 15.

Consolidated Notes To The Condensed Interim Financial Statements (Un-Audited)FOR THE HALF YEAR ENDED DECEMBER 31, 2019


The Group has applied IFRS 16 using the modified retrospective approach. Under this approach, the cumulative effect of initial application to be recognized in retained earnings at July 1, 2019. Accordingly, the comparative information presented for 2019 has not been restated - i.e. it is presented as previously reported under IAS 17 and related interpretations. The details of the changes in accounting policies are disclosed below:

As a lessee, the Group previously classified leases as operating or finance leases based on its assessment

of whether the lease transferred substantially all of the risks and rewards of ownership. Under IFRS 16 the Group recognizes right to use assets and lease liabilities for leases - i.e. these leases are on the statement of financial position. On initial application, the Group has also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (‘short-term leases’), and lease contracts for which the underlying asset is of low value (‘low-value assets’). Some lease contracts of the Group are extendable through mutual agreement between the Group and the lessor or cancellable by both parties immediately or on short notice. In assessing the lease term for the adoption of IFRS 16, the Group concluded that such contracts are short-term in nature. The Group recognizes the lease payments associated with these leases as an expense in statement of profit or loss.

The Group presents right to use assets in ‘property, plant and equipment’, the same line item as it

presents underlying assets of the same nature that it owns. The Group present its lease liabilities as a separate line item in the statement of financial position.

The Group recognizes a right to use asset and a lease liability at the lease commencement date. The right

to use asset is initially measured at cost, and subsequently at cost less any accumulated depreciation and impairment losses and adjusted for certain re-measurement of the lease liability. At transition, the Group recognised right to use assets equal to the present value of lease payments.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the interest rate implicit in the lease or if that rate cannot be readily determined, the Group’s incremental borrowing rate is used.

The lease liability is subsequently increased by the interest cost on the lease liability and decreased by

lease payment made. 4. ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of condensed interim financial statements requires management to make judgements,

estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.

In preparing this condensed interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation and uncertainty were the same as those that applied to the audited annual financial statements for the year ended June 30, 2019.


2019 2019-----(Rupees in ‘000)-----

5. PROPERTY, PLANT AND EQUIPMENT

Operating fixed assets 5.1 2,604,632 2,681,578 Right to use assets 5.3 76,928 - Capital work-in-progress 74,001 89,149

2,755,561 2,770,727




2019 2019-----(Rupees in ‘000)-----

5.1 Operating fixed assets

Net book value at beginning of the period / year 2,681,578 2,045,429 Transfer to right to use assets costing Rs.82,758 thousand (53,884)Additions during the period / year 5.2 61,765 792,239 Disposals and written off, costing Rs.3,695thousand (June 30, 2019: Rs.76,810 thousand) - at net book value (1,616) (14,434)Depreciation charge for the period / year (83,211) (141,656)Net book value at end of the period / year 2,604,632 2,681,578

5.2 Revaluation / additions to operating fixed assets, including transfer from capital work-in-progress,during the period / year

Owned

- Leasehold land - 189,300 - Building on leasehold land 44,375 143,039 - Plant and machinery 297 71,094 - Permanent tools 115 16,262 - Furniture and fixture 734 1,388 - Motor vehicles 11,598 32,133 - Trucks / lift trucks - 20,923 - Office machines & equipment 2,187 10,400 - Computers 542 2,769 - Jigs and special tools 1,917 274,633

Leased - Cars - 30,298 61,765 792,239

5.3 Right to use assets

Transfer from operating fixed assets costing Rs.82,758 thousand 53,884 -

Amount recognised on initial application 32,380 Additions during the period 3,293 - Depreciation charge for the period (12,629) - Net book value at end of the period 76,928 -

6. STOCK-IN-TRADE

Raw materials and components 4,901,543 7,300,167 Work-in-process 87,176 153,698 Finished goods including components 3,087,181 2,295,343 Trading stocks 750,242 610,217

8,826,142 10,359,425




2019 2019-----(Rupees in ‘000)-----

7. TRADE DEBTS - Unsecured

Government and semi-government agencies 10,468 2,072 Others including dealers - net 496,805 86,334

507,273 88,406

8. SHORT TERM BORROWINGS - Secured

Running finances 1,832,311 1,753,234 Finance against imported merchandise 2,280,235 2,941,765 Istisna 2,241,949 1,440,727 Murabaha 209,904 160,888

6,564,399 6,296,614

9. CONTINGENCIES AND COMMITMENTS

9.1 Contingencies There has been no significant change in status of contingencies other than describe below and as

disclosed in note 26.1 of the audited annual financial statements of the Group for the year ended June 30, 2019.

(Un-audited) (Audited)

December 31, June 30,2019 2019

-----(Rupees in ‘000)-----9.2 Commitments

Bank guarantees 3,649,783 3,943,290 Letters of credit 1,279,071 1,453,626

Quarter ended Half year ended Note December 31, December 31, December 31, December 31,

2019 2018 2019 201810. COST OF SALES -----------------------(Rupees in '000)-----------------------

Stocks at beginning of the period 2,963,558 2,233,730 2,905,560 1,963,261 Cost of goods manufactured 10.1 3,389,802 4,462,159 5,647,288 8,349,429 Trading goods - purchases (9,610) 182,179 412,436 326,418

3,380,192 4,644,338 6,059,724 8,675,847 6,343,750 6,878,068 8,965,284 10,639,108

Stocks at end of the period (3,837,423) (4,125,899) (3,837,423) (4,125,899) 2,506,327 2,752,169 5,127,861 6,513,209

10.1 Cost of goods manufactured

Work in process at beginning of the period 102,579 154,803 153,698 109,209 Raw materials and components consumed 3,116,130 4,233,709 5,118,237 7,842,122 Direct labour and factory overheads 258,269 310,322 462,529 634,773

3,374,399 4,544,031 5,580,766 8,476,895 3,476,978 4,698,834 5,734,464 8,586,104

Work in process at end of the period (87,176) (236,675) (87,176) (236,675) 3,389,802 4,462,159 5,647,288 8,349,429




Note December 31, December 31, 2019 2018

11. CASH USED IN OPERATIONS ----- (Rupees in '000) -----

(Loss) / profit before taxation (144,290) 384,149 Adjustment for non cash charges and other itemsDepreciation / amortization on:

- property, plant and equipment 83,211 55,322 - right to use asset 12,629 - - intangible assets 63 63 - investment property 121 123

Gain on disposal of operating fixed assets (2,208) (2,714)Provision for compensated absences 1,631 - Provision for doubtful advances 3,730 - Amortization of gain on sale and lease back of fixed asset (179) (181)Exchange loss 23 119 Provision for gratuity 11,223 12,431 Interest income (2,210) (1,291)Finance cost 488,048 254,916

451,792 702,937 Working capital changes - net 11.1 (472,130) (4,868,062)

(20,338) (4,165,125)

11.1 Working capital changes

Decrease / (increase) in current assets:Stores 4,260 (4,278)Stock-in-trade 1,533,283 (4,713,504)Trade debts (422,597) (28,340)Loans and advances (31,876) 32,114 Trade deposits and prepayments 73,982 194,157 Other receivables (3,882) (16,310)Sales tax refundable / adjustable (386,842) (297,524)

766,328 (4,833,685)Decrease in trade and other payables (1,238,458) (34,377)

(472,130) (4,868,062)

12. CASH AND CASH EQUIVALENTS

Cash and bank balances 65,057 243,936 Short term borrowings (6,564,399) (8,557,515)

(6,499,342) (8,313,579)

13. FINANCIAL RISK MANAGEMENT

The Group’s activities expose it to a variety of financial risks: credit risk, liquidity risk and market risk (including currency risk, interest rate risk and price risk).

The condensed interim financial statements does not include all financial risk management information

and disclosures required in the audited annual financial statements and should be read in conjunction with the audited annual financial statement of the Group as at June 30, 2019.

There have been no changes in the risk management policies since the year end.



14. TRANSACTIONS WITH RELATED PARTIES 14.1 Significant transactions with related parties are as follows:

Name of related party Nature of (Un-audited) and nature of transactions Half year endedrelationship December 31, December 31,

2019 2018---- (Rupees in '000) ----

(a) Ultimate Holding CompanyBibojee Services (Pvt.) Ltd. Dividend paid - 130,157

Bonus shares issued - 83,434 (b) Associated Companies

The General Tyre and Rubber Purchase of tyres 73,918 117,957 Co. of Pakistan Ltd. Dividend paid - 1,571 (Common Directorship) Bonus shares issued - 1,007

Services rendered - 70 Sale of truck and parts - -

Ghandhara Nissan Ltd. Assembly charges 255,949 396,659 (Common Directorship) Purchase of parts - -

Sale of parts 50 32 Dividend paid - 63,432 Rental income 1,597 1,430 Reimbursement of expenses 444 24 Bonus shares issued - 40,662

The Universal InsuranceCompany Limited Dividend paid - 18,473 (Common Directorship) Bonus shares issued - 11,841

Bibojee Investments (Pvt.) Ltd. Dividend paid - 334 (Common Directorship) Bonus shares issued - 214

Rehman Cotton Mills Ltd. Rent expense 900 900 (Common Directorship)

Gammon Pakistan Ltd. Rent expense 1,500 1,500 (Common Directorship) Reimbursement of expenses 63 1,533

Janana De Maluchho TextileMills Limited Reimbursement of expenses 1,077 834 (Common Directorship)

Ghandhara DF (Pvt.) Ltd. Rental income 1,597 - (Common Directorship) Sales - 8

Purchase of parts 2 22 (c) Other

Provident fund Contribution paid 4,732 - Key management Remuneration and

personnel other benefits 64,810 64,566


2019 2019-----(Rupees in ‘000)-----

14.2 Period / year end balances are as follows:Receivables from related parties

Loans and advances 290 340 Other receivables 10,840 6,981 Payable to related partiesCompensated absences 4,640 3,598

114,370 120,205



15. CORRESPONDING FIGURES

In order to comply with the requirements of International Accounting Standard 34 - ‘Interim Financial Reporting’, the condensed interim statement of financial position has been compared with the balances of audited annual financial statements of the Group for the year ended June 30, 2019, whereas, the condensed interim statement of profit or loss account and other comprehensive income, condensed interim statement of changes in equity and condensed interim statement of cash flows have been compared with the balances of comparable period of condensed interim financial statements of the Group for the period ended December 31, 2018. Corresponding figures have been rearranged and reclassified for better presentation wherever considered necessary, the effect of which is not material.

16. DATE OF AUTHORIZATION

This condensed interim financial statement was authorized for issue on February 19, 2020 by the Board of Directors of the Holding Company.




Address: F-3, Hub Chauki Road, S.I.T.E, Karachi - 75730, Pakistan

UAN: 111-445-111, 32560083-6,

Fax: 021-32560090, 32564458,

Helpline: (0348) 111-90-90,

Email: [email protected] and [email protected],

URL: www.gil.com.pk

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